The Department of Defense Continued doing Business with Contractors Linked to Fraud Charges

In a shocking report prepared by the Department of Defense for Vermont Senator Bernie Sanders, it was revealed that hundreds of defense contractors who defrauded the U.S. military ended up receiving more than $1.1 trillion in Pentagon contracts during the past decade.

What is even more shocking is that the Department of Defense to continue the practice of steering taxpayer dollars into the bank accounts of contractors that the courts say intentionally stole money from the federal government.

Sanders called the report “shocking” and said he believes that aggressive steps must be taken to ensure precious taxpayer dollars are not continually wasted.

“The ugly truth is that virtually all of the major defense contractors in this country for years have been engaged in systemic fraudulent behavior, while receiving hundreds of billions of dollars of taxpayer money,” according to Sanders.

“With the country running a nearly $15 trillion national debt, my goal is to provide as much transparency as possible about what is happening with taxpayer money.”

The report also detailed just how the Pentagon paid out $573.7 billion over the past 10 years to more than 300 defense contractors who were involved in civil fraud cases resulting in judgments of more than $1 million. An astounding $398 billion of the total judgment money was awarded after a settlement or judgment for fraud was reached. When counting monetary awards that were given out to the “parent” companies, in all, the Pentagon paid more than $1.1 trillion over the past 10 years to only the top 37 companies who were engaged in defense contracts fraud.

Another $255 million went to another 54 contractors who were convicted of criminal fraud during the same time frame. Of that total, $33 million was awarded to defense contract companies after being convicted of such crimes.

Some of the country’s largest and most successful defense contractors were involved in fraudulent activity. For example, Lockheed Martin paid $10.5 million in 2008 to settle charges that the company defrauded the government by submitting incorrect invoices for a multi-billion dollar contract for the Titan IV space launch vehicle program. However, being involved in fraudulent activity did not deter the relationship between Lockheed and the Defense Department, as they gave Lockheed an additional $30.2 billion in defense contracts during fiscal year 2009, which is more than the company had ever received before.

In another case, Northrop Grumman paid $62 million in 2005 in order to settle charges that the company “engaged in a fraud scheme by routinely submitting false contract proposals,” and “concealed basic problems in its handling of inventory, scrap and attrition.” Despite the serious charges of repeated fraud, Northrop Grumman received an additional $12.9 billion in defense contracts during the next year, 16 percent more than they received the year before.

“The sad truth of the matter is that virtually every major defense contractor in this country has, for a period of many years, been engaged in systemic, illegal, and fraudulent behavior, while receiving hundreds and hundreds of billions of dollars of taxpayer money,” the independent senator explained in a statement delivered on the Senate floor in the fall of 2009. In some instances, these contractors have done more than ripping off the taxpayers. In some instances, they have endangered the lives and well being of the men and women who serve our country in the armed forces.”

“It is clear that DOD’s current approach is not working and we need far more vigorous enforcement to protect taxpayers from massive fraud,” said Sanders.